Weight loss medications and non-alcoholic beverages are leading American consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from significant global demand for its products, which has prompted the company to enhance its revenue projections for the year.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting substantial growth in both revenue and operating income amidst a shifting market environment. However, the company’s volume sales in North America fell by 1% during the quarter, attributed to reduced sales in “away-from-home” channels, which encompasses options such as water, sports drinks, coffee, tea, and sodas.
This decline was slightly compensated by the success of Fairlife milk and Coca-Cola soda, which ranked first and second in retail sales growth respectively. To counterbalance the downturn, the company is collaborating with food chains to integrate its sodas into combo meals, partnering with McDonald’s to enhance their $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street predictions with reported revenue of $12.4 billion for the second quarter, translating to earnings of approximately $0.84 per share. Analysts had estimated the company would generate around $11.76 billion, or $0.81 per share.
The company has adjusted its expectations for organic revenue growth, raising its forecast to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi is experiencing challenges in attracting U.S. consumers, who are increasingly favoring weight loss and healthier options. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its underwhelming second-quarter performance to a series of product recalls.